Unfortunately, there is often as much disagreement about what exactly is meant by these six terms as there is about the exact definition of “the cloud” itself – which serves to make the picture cloudier.

Let’s consider these terms in turn.

Software as a Service (SaaS)

Software as a Service is a “pay as you go” approach to licensing software. Instead of paying a large amount upfront to own and run a software application. Users can access the application service remotely, usually via a mobile app or a web browser, and then pay a small monthly sum for the right to access it.

Many SaaS solutions operate on a “freemium” pricing model, whereby a starter version of the service (with limited functions, number of users, etc) is offered for free, but users are asked to upgrade to a monthly fee to access advanced features/ increase the number of users/ etc.

Most small to medium-sized businesses are probably using SaaS solutions within their business already – productivity apps like Trello or Basecamp are hosted and run entirely in the cloud.

What’s more, many traditional software vendors are moving to a “software as a service”-like pricing model, sometimes without the application being hosted in the cloud. For example, Adobe is moving towards a monthly subscription model, but users are still required to download versions of the software to their local devices in order to run them. Instead of being true cloud applications, only the licensing and some associated services are running in the cloud. However, you do gain the SaaS benefit of free updates included in the plan.

Platform as a Service (PaaS)

Probably the most successful Platform as a Service vendor started life as a Software as a Service vendor. Salesforce.com was so successful in offering its CRM software, hosted and running in the cloud, and licensed on a “pay as you go” basis, it now has a whole eco-system of application developers and vendors creating software to run on its platform.

Google App Engine, SAP Hana Cloud Platform, and Apprenda are other leading examples of PaaS solutions which offer a cloud-based fully-defined platform on which organisations can develop and run their own applications.

Platform as a Service can run in private, public and hybrid cloud environments.

You might also encounter the term PaaS being used by some SaaS vendors who offer their software for local install to customers with security or compliance concerns. Instead of running their software in the SaaS model in the public cloud, they offer it as a “PaaS solution” that can be run locally on a private (usually on-premise) cloud, but this is really a misuse of the term.

Infrastructure as a Service (IaaS)

Infrastructure as a Service has been the preserve of app developers and larger organisations. However, the competitive pricing of services like AWS, Azure, and Google Compute Platform is tempting many smaller businesses to investigate the potential IaaS has, to replace aging on-premise infrastructure or supplement existing infrastructure.

This is where the real cost benefit of cloud can be felt – instead of investing in servers, hardware, the creation, management and upkeep of a server room or data centre on premise, business owners can add additional compute and storage resources on a “pay as you go” pricing model.

The downside for small businesses is, of course, that broadband infrastructure needs to be in place to support this extra data traffic to the cloud and back. If you’re already using SaaS solutions, your data traffic has probably increased exponentially over the last decade already.

In addition, if you’re looking to use IaaS for compute as well as storage, you’re going to need to know your apps and, potentially, your desktops can run on these IaaS platforms.

The upside is that more of your IT expenditure is an operational expense rather than an upfront capital expense. Plus, you are likely to further reduce IT overheads because you no longer need someone onsite to manage your IT infrastructure and its security – that’s all happening in the cloud too. Once you’ve specified the cloud services and the security you need, those overheads disappear.

Would you like to know more about what the cloud could offer your business? Grant McGregor can help you audit your existing apps and infrastructure and identify where you could benefit from a move to the cloud. Contact us on 0808 164 4142.